Gina Bernacchi v. FIRST CHICAGO INSURANCE COMPANY and CHICAGO SEVEN CAB, INC .

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21-3363
GINA BERNACCHI ,
Plaintiff-Appellant,
v.
F IRST C HICAGO I NSURANCE C OMPANY and C HICAGO SEVEN
C AB, I NC .,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 21-CV-2533 — John J. Tharp, Jr., Judge.
____________________
A RGUED SEPTEMBER 14, 2022 — DECIDED O CTOBER 20, 2022
____________________
Before EASTERBROOK, R OVNER , and S T. EVE, Circuit Judges.
ST. EVE, Circuit Judge. Gina Bernacchi was travelling in a
taxicab insured by First Chicago Insurance Company when
an uninsured driver collided with the vehicle. After an Illinois
court ruled that the insurance policy covered her, she asked
First Chicago for compensation for injuries and expenses she
claims she incurred because of the crash. The insurance com-
pany has not been acting in a timely manner, she alleges, so

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2 No. 21-3363
she brought this suit seeking specific performance to “adjust
her claim”—that is, (1) admit or deny liability and (2) state the
amount of compensatory damages to which she is entitled
and the factual basis for that figure. The district court granted
First Chicago’s motion to dismiss, finding that her claim was
premised on Illinois Insurance Code provisions that do not
provide a private right of action.
On appeal, Bernacchi argues that the district court inap-
propriately dismissed her claim on a basis not presented or
briefed by the parties. She also argues that the district court
erred in concluding that her claim was based on violations of
Illinois law rather than provisions of the contract and that the
court improperly denied her leave to amend her complaint.
For the reasons below, we affirm the decision of the district
court.
I. Background
Gina Bernacchi was a passenger in a taxicab insured by
First Chicago Insurance Company when an uninsured driver
struck the cab. As part of its contract with the cab company,
First Chicago agreed to pay for certain damages resulting
from an accident with an uninsured motorist, including for
cab passengers. In February 2021, an Illinois court concluded
that Bernacchi was covered under the First Chicago policy up
to $350,000.
On February 11, 2021, Bernacchi sent a letter to First Chi-
cago detailing the nature of her claim with accompanying
documentation. She requested $350,000—the maximum pos-
sible recovery—though she valued her entire loss at $680,000.
The letter requested payment on or before March 30, 2021.

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No. 21-3363 3
First Chicago was allegedly less than responsive. On
March 29, 2021, it requested details about Bernacchi’s medical
records. Bernacchi faxed over her response the next day and
set a deadline of April 7, 2021, for the insurance company to
adjust her claim. On April 8, 2021, First Chicago issued writ-
ten interrogatories for Bernacchi to answer in two and a half
months. About a month later, Bernacchi sent the completed
interrogatories and asked the claims adjuster to identify with
specificity what was missing to adjust the claim.
On May 11, 2021, Bernacchi filed suit in federal court, al-
leging that First Chicago had still not done anything to adjust
her claim. She sought an order of specific performance direct-
ing First Chicago to adjust her claim within fourteen days. On
June 25, 2021, First Chicago made Bernacchi a settlement offer
of $45,000. It subsequently filed a motion to dismiss, arguing
that (1) the matter must be arbitrated and (2) its good-faith
settlement offer fulfilled its obligation to evaluate her claim.
Bernacchi disputed that a settlement offer was equivalent to a
claim adjustment and accused First Chicago of attempting to
shirk its obligations under the policy.
The district court held two hearings on First Chicago’s mo-
tion. During the first hearing, counsel for First Chicago stated
that the correct way to pursue Bernacchi’s claim was to file a
complaint with the Illinois Department of Insurance. During
the second hearing, Bernacchi’s lawyer confirmed that the
source of First Chicago’s obligation to adjust the claim
stemmed from the Illinois Insurance Code, rather than any
specific policy provision. The district court asked, “Are you,
in terms of the requirement for adjusting the claim, … relying
on the … various state law statutes and regulations that
you’ve identified in your response brief for the duty to adjust

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4 No. 21-3363
the claim in a timely fashion … is that correct?” Bernacchi’s
lawyer responded, “That’s absolutely correct.”
In an order dated August 10, 2021, the district court
granted First Chicago’s motion to dismiss for a reason not di-
rectly argued by the parties. It concluded that Bernacchi’s
complaint failed to cite any language in the contract creating
an obligation to adjust her claim or to do so within a certain
timeframe. Instead, the court reasoned, Bernacchi’s claim re-
lied upon certain sections of the Illinois Insurance Code, none
of which provide a private right of action.
Bernacchi subsequently filed a motion to vacate the judg-
ment, asking the court to reconsider on the basis that its deci-
sion contemplated an issue not presented or briefed by the
parties. She also requested leave to amend her complaint and
attached a proposed amended complaint, which included two
new counts in addition to the count in her original complaint.
The first new count alleged that First Chicago’s failure to ad-
just the claim was a breach of the covenant of good faith and
fair dealing. The second new count alleged that Illinois law
created an implied right of action. Neither count relied on the
policy.
The district court denied Bernacchi’s motions. It rejected
Bernacchi’s contention that it dismissed her complaint sua
sponte, finding that she was on notice of the possibility of dis-
missal given the full briefing of First Chicago’s motion to dis-
miss and the two motion hearings where the parties “vigor-
ous[ly]” debated the issues. The court further found that its
prior decision did not violate the party presentation principle.
It noted that, during the motion hearings, counsel for First
Chicago stated that the appropriate remedy for Bernacchi’s
grievance was through the Illinois Department of Insurance

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No. 21-3363 5
and Bernacchi’s counsel confirmed that her argument rested
entirely on state statutes and regulations.
As for Bernacchi’s proposed amended complaint, the dis-
trict court found that her added counts would not have pre-
vented dismissal. It concluded that her count asserting a vio-
lation of an implied covenant of good faith and fair dealing
“goes nowhere,” as “it has been recognized time and again
that under Illinois law the implied covenant of good faith and
fair dealing does not give rise to an independent cause of ac-
tion.” The district court noted that her count alleging an im-
plied private right of action failed for similar reasons. Con-
cluding that amendment would be futile, the district court de-
nied her leave to amend. Bernacchi filed this timely appeal.
II. Analysis
We review the dismissal of a complaint for failure to state
a claim de novo, construing all allegations and reasonable in-
ferences in favor of the plaintiff. Circle Block Partners, LLC v.
Fireman’s Fund Ins. Co., 44 F.4th 1014, 1018 (7th Cir. 2022). We
review a district court’s denial of leave to amend a complaint
for abuse of discretion. CMFG Life Ins. Co. v. RBS Sec., Inc., 799
F.3d 729, 735 (7th Cir. 2015). Where the basis for denial is fu-
tility, as it is here, however, “we apply the legal sufficiency
standard of Rule 12(b)(6) to determine whether the proposed
amended complaint fails to state a claim.” Runnion ex rel. Run-
nion v. Girl Scouts of Greater Chi. & Nw. Ind., 786 F.3d 510, 524
(7th Cir. 2015).
Bernacchi argues that the district court erred by dismiss-
ing her complaint for reasons not raised by First Chicago’s
motion; finding that her claim was premised on Illinois law

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6 No. 21-3363
rather than any contractual provision; and denying leave to
file an amended complaint. These positions fall flat.
A. Party Presentation Rule
Bernacchi states that the district court erred by deciding
the case on grounds not raised by First Chicago in its motion
to dismiss, resulting in her having “insufficient notice and op-
portunity to be heard.” Her arguments invoke the party
presentation rule, which stands for the proposition that par-
ties “frame the issues for decision,” whereas the courts play
“the role of neutral arbiter of matters the parties present.”
United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020)
(quoting Greenlaw v. United States, 554 U.S. 237, 243 (2008)).
“[A]s a general rule, our system ‘is designed around the
premise that [parties represented by competent counsel]
know what is best for them, and are responsible for advancing
the facts and argument entitling them to relief.’” Id. (quoting
Castro v. United States, 540 U.S. 375, 386 (2003) (Scalia, J., con-
curring in part and concurring in the judgment)).
The party presentation rule, however, is “not ironclad.” Id.
A court “is not limited to the particular legal theories ad-
vanced by the parties, but rather retains the independent
power to identify and apply the proper construction of gov-
erning law.” Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99
(1991). The Supreme Court has recognized that a “court may
consider an issue ‘antecedent to … and ultimately dispositive
of’ the dispute before it, even an issue the parties fail to iden-
tify and brief.” See U.S. Nat’l Bank of Oregon v. Indep. Ins. Agents
of Am., Inc., 508 U.S. 439, 447 (1993) (quoting Arcadia v. Ohio
Power Co., 498 U.S. 73, 77, (1990)).

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No. 21-3363 7
Here, the district court did not violate the party presenta-
tion rule. The parties squarely argued about Illinois insurance
statutes and administrative regulations. See 50 Ill. Adm. Code
919.50, 919.40; 215 ILCS 5/154.6. In fact, during one of the mo-
tion hearings, Bernacchi’s attorney admitted, in no uncertain
terms, that her claim was premised on alleged violations of
Illinois law.1 Before the district court could determine
whether First Chicago violated these duties, it had to deter-
mine whether the cited statutes and regulations provided a
private right of action under which Bernacchi could sue. It
was appropriate for the district court to base its decision to
dismiss on this antecedent issue. See U.S. Nat’l Bank of Oregon,
508 U.S. at 447.
B. Motion to Dismiss
Bernacchi also contends that the district court erred in dis-
missing her claim because she sufficiently pleaded in her com-
plaint that First Chicago breached the contract by failing to
adjust the insurance claim. Contrary to the finding of the dis-
trict court, Bernacchi contends that the complaint alleges that
the contract, not Illinois law, entitles her to a claim adjust-
ment. She points to several paragraphs in the complaint,
which she contends allege that “an essential function of the
insurance company” is to adjust the claim and “First Chi-
cago’s failure to adjust the claim additionally prevented im-
plementation of the arbitration clause.” She further argues
that First Chicago’s contractual duty to “pay all sums the
1 Q: “Are you … relying on the … various state law statutes and regula-
tions that you’ve identified in your response brief for the duty to adjust
the claim in a timely fashion … ?”
A: “That’s absolutely correct.”

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8 No. 21-3363
‘insured’ is legally entitled to recover” encompasses the duty
to adjust her claim.
Even accepting Bernacchi’s reading of the complaint, how-
ever, her allegations fail to state a claim. Under Illinois law, a
plaintiff seeking specific performance must allege a contract
“so certain and unambiguous in its terms and in all its parts
that a court can require the specific thing contracted for to be
done.” Cefalu v. Breznik, 154 N.E.2d 237, 239 (Ill. 1958). Bernac-
chi does not do this and admits that she is not proceeding on
a breach of the policy. Her complaint is replete with refer-
ences to Illinois law but contains not a single citation to any
specific provision of the contract. For example, ¶ 24, on which
Bernacchi relies in her appellate briefs, cites 50 Ill. Adm. Code
919.50 and 919.40 and 215 ILCS 5/154.6 for the proposition
that “[a]n essential function of one’s insurance company is to
adjust claims for benefits made by its insureds” but not the
contract. And Bernacchi’s references to the contract’s arbitra-
tion clause and “pay all sums” provision fall far short of the
“certain and unambiguous” language needed for a specific
performance claim. Nothing in these provisions—nor in any
other cited in the complaint—states that the insurance com-
pany must adjust her claim within a certain timeframe.
Without an alleged contractual provision obligating First
Chicago to adjust her claim, Bernacchi’s case rests entirely on
state regulations and statutes. But these provisions do not
provide a private cause of action. It is well established under
Illinois law that “a violation of the insurance rules contained
in Title 50 of the Illinois Administrative Code does not give
rise to a private cause of action.” Weis v. State Farm Mut. Ins.
Co., 776 N.E.2d 309, 311 (Ill. Ct. App. 2002); see also Vine St.
Clinic v. HealthLink, Inc., 856 N.E.2d 422, 439 (Ill. 2006); Pryor

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No. 21-3363 9
v. United Equitable Ins. Co., 963 N.E.2d 299, 301 (Ill. Ct. App.
2011). Under these regulations, the Illinois Department of In-
surance has the sole authority to enforce the codes, and the
proper remedy for a party who alleges a violation is to submit
a complaint with the department.
State insurance statutes do not help her either. 215 ILCS
5/154.6 enumerates a list of acts that constitute improper
claims practice, but neither it nor its surrounding statutes pro-
vide a private right of action. See Am. Serv. Ins. Co. v. Passarelli,
752 N.E.2d 635, 638 (Ill. Ct. App. 2001). Instead, § 154.6 lists
improper claim practices, and § 154.7 vests the State Director
of Insurance with the authority to penalize such practices. Id.
Under this framework, compliance with statutory obligations
is within the purview of the state department, rather than in-
dividuals who “cannot personally seek damages … under
section 154.6.” Id. at 639.
Bernacchi maintains that these cases do not “supplant the
insurer’s contractual obligation to adjust the claim.” Fair
enough. We do not read the cases as displacing contracting
parties’ ability to incorporate Illinois law into their contracts.
In other words, if the parties contracted to require an adjust-
ment in the same terms as provided by law, that would be
enforceable in a breach of contract action. But this is not what
Bernacchi alleges happened here. All she states is that her
“claim is umbrellaed by the ‘minimum standards’ outlined”
in the statutes and administrative codes. She does not allege
that the parties expressly incorporated such “minimum
standards” into their contract. Without this, her claim fails.

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10 No. 21-3363
C. Leave to Amend
Federal Rule of Civil Procedure 15(a) governs the amend-
ment of pleadings before trial. Rule 15(a)(1) provides that a
party “may amend its pleading once as a matter of course.”
“In all other cases, a party may amend its pleading only with
the opposing party’s written consent or the court’s leave.”
Fed. R. Civ. P. 15(a)(2). Under the Rule, a district court should
“freely give leave when justice so requires,” id., “[u]nless it is
certain from the face of the complaint that any amendment
would be futile or otherwise unwarranted.” Barry Aviation Inc.
v. Land O’Lakes Mun. Airport Comm’n, 377 F.3d 682, 687 (7th
Cir. 2004).
Bernacchi’s proposed amended complaint added two new
counts: The first alleges a breach of contract based on a viola-
tion of the implied covenant of good faith and fair dealing.
The second states that Bernacchi can directly enforce 50 Ill.
Adm. Code 919.50, 919.40 and 215 ILCS 5/154.6 against First
Chicago because they contain an implied private right of ac-
tion. As the district court correctly concluded, neither of these
proposed counts would have survived a second motion to
dismiss.
The first count fails because the implied covenant of good
faith and fair dealing does not give rise to an independent
cause of action under Illinois law. Fox v. Heimann, 872 N.E.2d
126, 134 (Ill. Ct. App. 2007). “Rather, this obligation is essen-
tially used as a construction aid in determining the intent of
the parties where an instrument is susceptible of two conflict-
ing constructions.” Id. In other words, “where an instrument
is susceptible of two conflicting constructions, one which im-
putes bad faith to one of the parties and the other does not,”
the implied covenant of good faith and fair dealing indicates

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No. 21-3363 11
that “the latter construction should be adopted.” Mid-West En-
ergy Consultants, Inc. v. Covenant Home, Inc., 815 N.E.2d 911,
914 (Ill. Ct. App. 2004). But the covenant cannot be used to
“add terms in order to reach a result more equitable to one of
the parties.” Id. at 916. Here, the contract does not impose an
obligation upon First Chicago to adjust insurance claims
within a certain timeframe, and Bernacchi cannot use the cov-
enant to rewrite the contract to do so.
Bernacchi’s proposed amended complaint also fails to al-
lege an implied right of action. Under Illinois law, a private
right of action may be implied from a statute only if the fol-
lowing elements are met:
(1) the plaintiff is a member of the class for whose ben-
efit the legislature enacted the statute; (2) the statute
was designed to prevent the plaintiff's injury; (3) a pri-
vate right of action is consistent with the statute's un-
derlying purpose; and (4) implying a private right of
action is necessary to provide an adequate remedy for
violations of the statute.
Helping Others Maintain Env’t Standards v. Bos, 941 N.E.2d 347,
362–63 (Ill. Ct. App. 2010). The key question is whether the
legislature, in enacting the statute, intended to create a private
right of action. Id. at 363.
As explained above, the cited regulations and statutes cre-
ate a framework in which the Illinois Department of Insur-
ance is tasked with regulating the actions of insurance com-
panies. The state legislature expressly empowered the State
Director of Insurance to penalize improper claim practices.
215 ILCS 5/154.6–.7. And an aggrieved individual can file a

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12 No. 21-3363
complaint with the Department of Insurance,2 making it un-
necessary for courts to create an implied right of action to pro-
vide an adequate remedy for violations of the statute. For this
reason, Bernacchi’s proposed claim fails. See Marque Medicos
Fullerton, LLC v. Zurich Am. Ins. Co., 83 N.E.3d 1027, 1042 (Ill.
Ct. App. 2017) (“All four factors must be met before a private
right of action will be implied.”).
Because any amendment would be futile, the district court
did not abuse its discretion in denying leave to amend.
III. Conclusion
The district court did not err in dismissing Bernacchi’s
claim based on the fact that the Illinois law underlying her
claim does not provide a private cause of action. Whether Ber-
nacchi could sue under these statutes and regulations was an
antecedent issue to those raised in the parties’ briefs, and it
was not a violation of the party presentation rule for the court
to consider it. The court also properly denied Bernacchi leave
to amend her complaint because amendment would be futile.
The decision of the district court is thus
A FFIRMED.3
2 During oral argument, Bernacchi’s lawyer confirmed that Bernacchi has
filed a complaint with the Illinois Department of Insurance.
3 Bernacchi has also filed a motion to strike certain documents included in
First Chicago’s appellate response brief that she contends are not part of
the record. Because our decision does not rely on the disputed material,
the motion is denied as moot.

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